a) Discuss important characteristics that make markets for health care services different from…

a)Discuss important characteristics that make markets for health care services different from markets for other goods and services.

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b) Discuss two specific allocation rules (equity theories or equity positions) being relevant for health care services.

c)According to a version of the Grossman model, the (first-order) condition describing an individual’s optimal choice of health stock (H) is as follows:

(*)

where;

W = the wage rate

= The marginal productivity of health

= Lagrange multiplier (shadow price)

P = Price per unit of medical services

E = Educational level (stock of knowledge)

= Discount rate (interest rate)

= Depreciation rate

Why does the wage rate (W) affect the demand for health?